Here & Now

Fast Facts: What's Causing Wisconsin's Budget Windfall?

Frederica Freyberg:

Wisconsin is in the best financial situation in the history of the state according to state officials. We’re talking about a projected $6.5 billion state budget surplus. That’s 6.5 billion with a “b.” In this Fast Facts report “Here & Now” reporter Steven Potter explores how the state checking account ended up so far in the black and what might affect the state’s finances going forward.

Steven Potter:

This unexpected windfall is because the state will end the current fiscal year in July with more money than state agencies were allocated for their needs. Imagine it like your own household budget. You plan for the bills you have and make a schedule to pay them when they’re due. But then you get a surprise. A hefty lump sum payment right after you pay those bills. In the state’s case, that’s $6.5 billion. Analysts say the reason state coffers are overflowing is primarily due to three factors. There’s been an influx of federal funds from COVID relief bills that have offset state costs for expenses such as Medicaid. Also elected leaders have kept tight controls over state agency spending and there’s been a considerable increase in tax revenue, including not only sales tax but also investment and corporate taxes. Of course, inflation is playing a major part in this ballooning budget surplus. The more people spend, the more taxes are collected. Officials warn however the full projected surplus is not guaranteed and the end amount may be smaller. Factors affecting that include a possible recession next year as well as economic disruptions with the ongoing war in Ukraine. Volatility of business and the stock market could also lead to less corporate and investment taxes being taken in.

Woman:

2010-11, there was a $3.6 billion deficit.

Steven Potter:

This state budget surplus is in stark contrast to years past when elected leaders faced hundreds of millions of dollars in budget shortfalls and structural deficits. Regardless of exactly how much extra surplus the state ends up having, we can be sure of one thing: the state’s elected leaders will find numerous ways to argue over how to spend it. For “Here & Now,” I’m Steven Potter.